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A Study of The Role of Banks in International Trade: Project Report

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A STUDY OF THE ROLE OF BANKS IN INTERNATIONAL

TRADE

PROJECT REPORT
A Report Submitted in Partial Fulfillment of the Requirements for the award of Degree
of Master of Business Administration of Pondicherry University

Submitted By
YAMINI S G

Register No: 0217380183

MASTER OF BUSINESS ADMINISTRATION- INTERNATIONAL


BUSINESS

Research Supervisor

DR.V. JACOB JOHN, MA, PhD

DIRECTORATE OF DISTANT EDUCATION

PONDICHERRY UNIVERSITY

PONDICHERRY - 605 014, APRIL 2019


STUDENT’S DECLARATION

I, YAMINI S G hereby declare that the Project Work titled “The study of the Role of
banks in International Trade” is the original work done by me and submitted to the
Pondicherry University in partial fulfillment of requirements for the award of Master of
Business Administration in International Business. This is a record of original work done
by me under the supervision of DR.V. JACOB JOHN MA, PhD , Loyola College, Chennai
– 600 034.

Reg No: 0217380183

Date:

Signature of the Student

Yamini S G
CERTIFICATE OF THE GUIDE

This is to certify that the Project Work titled “The study of the Role of banks in
International Trade” is a bonfied work of YAMINI S G (Reg No:0217380183) carried out
in partial fulfillment for the award of degree of Master of Business Administration in
International Business of Pondicherry University under my guidance. This project work is
original and not submitted earlier for the award of any degree / diploma or associate ship of
any other University / Institution.

Place: Chennai

Date: Research Supervisor


ACKNOWLEDGEMENT

The satisfaction and euphoria that accompany the successful completion of any task
would be but incomplete without the mention of the people who made it possible, whose
constant guidance and encouragement crowned our efforts with success.

I consider it my privilege to express gratitude and thanks to the Pondicherry


University - Loyola College Society and its Faculty Members for giving me the
opportunity to conduct this study. Would also thank all the people who helped me during the
training as well as in preparing project.

I also thank DR.V. JACOB JOHN MA, PhD , Loyola College, Chennai, my
project supervisor who helped me out in making this project perfect and correct.

Eventually, sincere thanks to Prof. T. EUGINE, Coordinator of the PULCS


Twinning Programme of his kind encouragement and constant support extended in
completion of this project work from the bottom of my heart.

Finally, this project would not have been possible without whole hearted cooperation
and support that I have received from my family, friends, colleagues, and faculties.

Truly,

YAMINI S G
CONTENTS

CHAPTER PARTICULARS PAGE


NO. NO.

1. 1.1 INTRODUCTION 1

1
1.1.1 Basis of International or Foreign Trade
2
1.1.2 Foreign Exchange
3
1.2 OBJECTIVE OF THE STUDY
3
1.3 NEED FOR THE STUDY
3
1.4 LIMITATION OF THE STUDY
4
1.5 INDUSTRY PROFILE
5
1.5.1 Commercial Banks and its significance
5
1.5.2 Miscellaneous Banking Services

1.6 COMPANY PROFILE 6

1.6.1 History 6

7
1.6.2 Operations of HSBC
8
1.6.3 Principal Subsidiaries

1.6.4 Principal business groups and division 9

1.6.5 HSBC excellence in trade 10


LITERATURE REVIEW
2. 2.1 Definition 13

13
2.2 Description
13
2.3 Products and services
15
2.4 Methods of Payment
16
2.4.1 Cash in advance or Advance payment
16
2.4.2 Open account
16
2.4.3 Documentary collections

2.4.4 Letters of credit or Documentary credit 19

2.5 INCOTERMS 22

2.6 Risks involved in International trade 30

2.6.1 Types of risks in international trade 30

39
2.7 Common Import / Export documents
48
2.8 Common Trade Terms

RESEARCH METHODOLOGY
3 3.1 RESEARCH 57

3.2 RESEARCH METHODOLOGY

3.3 RESEARCH DESIGN 57

58
3.4 CASE STUDY 1
59
3.5 CASE STUDY 2
60
3.6 TOOLS USED IN HSBC

3.7 DATA COLLECTION


61
DATA ANALYSIS & INTERPRETATION 62

4.1 Pakistan 62

4.2 United states of America 63

4. 4.3 United Kingdom 64

4.4 India 65

4.5 China 66

5. SUMMARY AND CONCLUSION 67

BIBLIOGRAPHY
6.
6.1 Magazines 69

6.2 References

6.3 Webliography
LIST OF TABLES

TABLE PAGE
NO. NAME OF THE TABLE NO.

2.5 INCOTERMS TABLE 29


LIST OF FIGURES

FIGURE PAGE
NO. NAME OF THE FIGURES NO.

2.4 METHODS OF PAYMENT 15

2.4.3 DOCUMENTARY COLLECTION PROCESS 18

2.4.4 DOCUMENTARY CREDIT PROCEDURE DIAGRAM 19


LIST OF CHARTS

CHART PAGE
NO. NAME OF THE CHART NO.

4.1 Percentage of involvement of trade in Pakistan 62

4.2 Percentage of involvement of trade in USA 63

4.3 Percentage of involvement of trade in United Kingdom 64

4.4 Percentage of involvement of trade in India 65

4.5 Percentage of involvement of trade in China 66


EXECUTIVE SUMMARY

INTERNATIONAL TRADE FINANCE is a detailed study of the Import, Export, &Foreign


Exchange Market of India with the main objective of making a successful career in the sector
by getting placed with one of the Foreign Exchange companies. The project has explored the
need for trade finance and introduced some of the most common trade finance tools and
practices. A proactive role of governments in trade finance may alleviate the lack of trade
finance in emerging economies and contribute to trade expansion and facilitation. Recent
times have witnessed remarkable growth in international transactions. With the fast growing
international oriented transactions in business enterprise. The different areas which play vital
role in growth of Global Trade Finance market such as Methods of Payments of International
Trade, Letter of credit, and concept of Forfeiting, Factoring, and Buyers Credit, Pre shipment
& Post Shipment Financing and Role of ECGC in foreign exchange market. While doing this
project, different aspect of ECB, Buyers Credit, concept of LIBOR & Margins in Interest Rate
were studied. Trade financing in India is in nascent stage in order to explore foreign exchange
market & smooth functioning of transactions the government should undertake some initiative
to with-stand among the developed countries. Needless to say, no text paper or text book by
itself can convey the full richness of either the theoretical development or subtleness if
practice in its chosen fields. This Project is a sincere attempt to provide a basic understanding
of the complexities of international trade of world finance in a simple manner.

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